Weighing the Options of Refinancing

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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it could be time to look into it. Refinancing your mortgage loan has some advantages that can make it worth the up-front cost several times over.

Advantages of Refinancing

When you refinance, you may be able to reduce your interest rate and mortgage payment , perhaps by a lot. You could also be able to "cash out" a portion of your equity, that you are able use to consolidate debt, improve your home, or finance a vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to build up your equity quicker.

Fees and Expenses

As you probably expect, you will have to pay for your the refinance process. You will have to pay the same kinds of fees as with your existing mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can result in a better interest rate. The money you will save on the life of the mortgage may be significant if you've paid up front about 3% of the new loan balance. You may be told that these points can be tax deductible, but as tax regulations are difficult to keep up with, please consult with a tax professional before depending on this.

Another cost that a borrower may consider is that a reduced interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 623-340-0934 to help you do the math.

All things considered, for most borrowers the amount of up-front costs to refinance will be paid back soon in savings each month. We will help you determine what program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing may effect your taxes. Call us at 623-340-0934 to get started.

Curious about refinancing your home? Give us a call at 623-340-0934.

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